Can Paramount Skydance make an offer of over $30 per share for WBD?

Investing.com - Needham & Company stated in its latest research report that a key issue in Warner Bros. Discovery’s acquisition battle is whether Paramount Skydance is willing to make an offer above $30 per share.

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Analyst Robert Fishman told investors that this has been “the biggest ongoing issue in the WBD deal saga,” especially after Warner Bros. Discovery received a seven-day waiver from Netflix to negotiate with Paramount Skydance.

Needham said WBD revealed that Paramount Skydance indicated “a willingness to raise the bid to $31 per share. But this is still not their ‘best and final’ offer.”

Fishman pointed out that the company expects Paramount Skydance “to raise the bid at least to $32 per share to pressure NFLX to follow suit.”

However, if bidders want to “end the bidding war today,” Needham believes “a bid around $34 per share will prevent further debate over Discovery Global’s value.”

For Netflix, as prices rise, “the deal’s appeal diminishes,” Fishman wrote. Needham’s base scenario “believes that exceeding $30 per share will not generate added value,” although the firm notes that media mergers and acquisitions “rarely develop as expected.”

Needham said the core issue is whether Netflix can “maintain discipline in its strategy and exit if PSKY’s bid increases significantly.”

According to the report, regardless of the outcome, Netflix shareholders could benefit. Fishman wrote that “the long-term benefits of owning Warner Bros. assets” are not fully reflected in the stock price, but if the company chooses to exit, its “subscription user and ad growth, as well as pricing power and other core fundamentals, should help rebuild investor confidence.”

Needham reiterated its buy ratings for Netflix and Warner Bros. Discovery.

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